Minoru Kiuchi said the period defined by heavy monetary stimulus and agile fiscal policy has ended. He added Japan has left the monetary-easing era and shifted to a backdrop of modest inflation and higher interest rates. Coming from one of the cabinet's most forceful reflation advocates, that pivot carries extra weight.
Kiuchi aimed to distinguish the current policy mix under Prime Minister Sanae Takaichi from the Abenomics playbook. "If you view Abenomics and Sanae-nomics as essentially the same thing, I would appreciate it if you could understand my remarks to mean that the latter is not reflationary policy," he said. He also emphasized, "I understand that we have not yet fully escaped deflation."
His remarks landed during a week of renewed yen softness and rising government bond yields. Separately on Friday, Finance Minister Satsuki Katayama said US President Donald Trump relayed concern about the yen during a meeting earlier this week with Prime Minister Takaichi. The flurry of senior-official comments signaled an effort to support the currency and calm investors uneasy about Takaichi's spending plans. After Katayama spoke, the yen briefly touched 158.33 per dollar, though it is still hovering near thresholds that might prompt Tokyo to step into the foreign-exchange market again.
Kiuchi kept his post in a cabinet reshuffle last week, a nod to continuity that also reinforced a view among some market watchers that the government favors expansionary fiscal spending even as it seeks to temper the speed of Bank of Japan rate increases. At a meeting Kiuchi attended, the BOJ increased its policy rate last week. His perspective lines up with recent remarks from US Treasury Secretary Scott Bessent, who has called on Japan to shift away from Abenomics-style reflation. Bessent has conveyed that the BOJ should look at lifting rates so the yen can settle at a more suitable level.
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